Transaction fees are lower with bitcoin than with credit cards, because bitcoins are transferred directly to the customer’s wallet in a low-fee manner. The risk associated with using bitcoins is greater than the risk associated with the use of credit cards. Although the maximum potential risk and loss from the use of bitcoins is relatively low, it is possible that one or more of the following events may occur: a major Bitcoin exchange suffers a material disruption, which may cause the value of bitcoins to decline; large numbers of bitcoins are stolen or stolen by fraud; hackers access the bitcoin network and obtain access to bitcoins that are not encrypted or signed; a malware attack increases the likelihood of a malicious actor gaining access to bitcoins through fraud or a malware attack; a government or quasi-government agency effectively controls the bitcoin network; a major financial institution clients with significant holdings of bitcoins decides to start using bitcoins as a form of payment or starting to accept bitcoins as payment for goods and services; a bitcoin user or merchant dies and leaves heirs with insufficient bitcoins to pay for goods and services; or the value of bitcoins is reduced by one-fifth. The Sponsor expects that the price of bitcoins will fluctuate over time in response to the above factors. In addition, there is no assurance that the Trust will be able to sustain its operations at or in compliance with the applicable regulatory requirements. If the Trust is not able to operate, the Sponsor expects the value of the Trust’s bitcoins to decline and, therefore, the value of an investment in the Shares.

Bitcoin Exchanges

There are currently four bitcoin exchanges, the three largest of which are Bitfinex, Bitstamp, and GDAX (visit https://www.sofi.com/money/ to learn more). The Winkdex spot price of bitcoins is set using a volume-weighted, two-hour U.S. Dollar auction price from the major bitcoin exchanges. The trading price on each of the major U.S. Dollar-denominated bitcoin exchanges is not the same as the bitcoin price on the major Bitcoin Exchange. Currently, GDAX maintains a limit of $4,000,000 of bitcoin on its books for “long” positions (i.e., positions lasting more than a day). Each of the major U.S. Dollar-denominated bitcoin exchanges provides a publicly available Bitcoin Price Index (“BPI”) that calculates the market price of bitcoins on a given Bitcoin Exchange. The Index is publicly available at . GDAX maintains an “over-the-counter” market that is not considered part of the Bitcoin Exchange Market. The prices for bitcoins on GDAX over-the-counter market may differ from the bitcoin prices that are publicly available on the Bitcoin Exchange Market or the over-the-counter market. As of the date of this prospectus, GDAX has “notched” bitcoin prices over the counter on a daily basis. A “notched” price is defined as the value of a bitcoin in a bid/ask spread, where the difference between the bid price and the current bitcoin price equals the “notched” price. Each time an Over-the-Counter (OTC) market is created, prices are submitted to an “algorithm” which calculates and maintains a single market price. These OTC markets are available only to participants on the Bitcoin Exchanges. There is a limit of three such markets to be created every five (5) days. These markets are available only to users that are qualified as Participants in the Trust.

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